Picture: REUTERS
Picture: REUTERS

New acquisitions helped electrical wholesaler and lighting distributor ARB Holdings boost revenue 4.5% to R2.7bn in the year to end-June, but SA’s tepid economic growth and lack of infrastructure continues to darken its short-to-medium-term outlook. 

Operating profit for the period fell 24% to R155.4m, with the profitability of the group’s electrical division performing particularly poorly, falling 33.7% as the company continues to face reduced demand in the wake of Eskom’s debt woes.

Revenue continues to be hampered by the lack of any real economic growth or infrastructure spending, the company said, adding that its indirect supply of overhead line products to Eskom had declined “substantially”.

The company did benefit from two acquisitions during the period, however, including the February 2018 of automation and instrumentation group CraigCor and the January 2019 acquisition of lighting distributor Radiant.

The latter acquisition helped boost revenue in the company’s lighting division 29.3% to R648m, 

ARB is an investment and property holding company that owns investments in related trading and distribution businesses.

Major investment holdings include 74% of ARB Electrical Wholesalers, a level 2 BEE company that operates 26 electrical wholesale branches as of 2019, up from 22 in the year before.

It also holds 60% of Eurolux, which imports and distributes light fittings, lamps and related accessories.

The group kept its dividend unchanged at 25c per share, despite the 18.8% decline in headline earnings per share to 58.2c.

The company said on Thursday that acquisitions remain an integral part of its strategy, even though the short-to-medium-term outlook for the SA economy was “more of the same”.

It is, however, confident that the situation may ultimately improve, given the government’s priorities, which include improving electricity distribution in rural areas.

“The group remains profitable and cash generative, ensuring that it is adequately positioned to take advantage of any significant upturn in the SA economy,” the statement read.

gernetzkyk@businesslive.co.za